Chrysler Contract With United Auto Workers To Establish VEBA Receives Preliminary Approval

U.S. District Judge Robert Cleland on Wednesday awarded preliminary approval to a contract agreement between the Chrysler Group and the United Auto Workers that would establish a voluntary employees' beneficiary association and require hourly retirees to pay more for health care, the AP/Detroit News reports. The contract, negotiated last year, would apply to 125,000 Chrysler retirees and their dependents, as well as 45,000 active employees.

Under the contract, Chrysler agreed to contribute about $10.3 billion to the VEBA. The VEBA, which would take effect in 2010, would reduce retiree health benefit liabilities for Chrysler by about $18 billion. An 11-member board comprising six members appointed by a court and five selected by UAW would administer the VEBA.

The contract also would require single Chrysler hourly retirees to pay an $11 monthly premium and a $159 annual deductible for health care until at least 2012, when the VEBA board could make additional changes.

Cleland scheduled a public hearing on the contract for June 30. Last month, Cleland awarded preliminary approval to a similar contract agreement between General Motors and UAW. U.S. District Court Judge Paul Borman on Thursday plans to consider a similar contract agreement between Ford Motor and UAW (Durbin, AP/Detroit News, 4/9).